Correlation Between Meta Platforms and TuanChe ADR
Can any of the company-specific risk be diversified away by investing in both Meta Platforms and TuanChe ADR at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Meta Platforms and TuanChe ADR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meta Platforms and TuanChe ADR, you can compare the effects of market volatilities on Meta Platforms and TuanChe ADR and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Meta Platforms with a short position of TuanChe ADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meta Platforms and TuanChe ADR.
Diversification Opportunities for Meta Platforms and TuanChe ADR
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Meta and TuanChe is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Meta Platforms and TuanChe ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TuanChe ADR and Meta Platforms is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Meta Platforms are associated (or correlated) with TuanChe ADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TuanChe ADR has no effect on the direction of Meta Platforms i.e., Meta Platforms and TuanChe ADR go up and down completely randomly.
Pair Corralation between Meta Platforms and TuanChe ADR
Given the investment horizon of 90 days Meta Platforms is expected to generate 0.36 times more return on investment than TuanChe ADR. However, Meta Platforms is 2.81 times less risky than TuanChe ADR. It trades about 0.12 of its potential returns per unit of risk. TuanChe ADR is currently generating about -0.04 per unit of risk. If you would invest 34,359 in Meta Platforms on September 12, 2024 and sell it today you would earn a total of 27,573 from holding Meta Platforms or generate 80.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Meta Platforms vs. TuanChe ADR
Performance |
| Timeline |
| Meta Platforms |
| TuanChe ADR |
Meta Platforms and TuanChe ADR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meta Platforms and TuanChe ADR
The main advantage of trading using opposite Meta Platforms and TuanChe ADR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meta Platforms position performs unexpectedly, TuanChe ADR can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in TuanChe ADR will offset losses from the drop in TuanChe ADR's long position.| Meta Platforms vs. Alphabet Inc Class A | Meta Platforms vs. Twilio Inc | Meta Platforms vs. Snap Inc | Meta Platforms vs. Baidu Inc |
| TuanChe ADR vs. Twilio Inc | TuanChe ADR vs. Meta Platforms | TuanChe ADR vs. Alphabet Inc Class C | TuanChe ADR vs. Alphabet Inc Class A |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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